That’s no bull: S&P 500 can rise 15%-20%

As the broad stock market inches ever closer to a record high — and exhibits few if any signs that it’s on the cusp of a major upside breakout — one Wall Street bull is predicting just that: a big rally.

Yup. A big rally. As in a potential 15% to 20% move higher in the next six to 12 months. The bullish market call comes from Tony Dwyer, analyst at Canaccord Genuity.

And even Dwyer admits what scares him most is his “high degree of conviction” in his upbeat call, which he says is not shared by many  on Wall Street.

So what’s giving Dwyer the confidence to go out on a limb and basically predict a minibull market — or 20% jump — within an ongoing bull market that is now more than seven years old?

He cites statistics that show the S&P 500 stock index normally shoots up sharply when yields on corporate bonds drop sharply, as they’ve been doing.

He also notes that when more than 90% of the stocks in the index are trading above their average price in the past 50 days, the market was up a median of 16% a year later.

His core thesis includes the belief that a U.S. “recession is years away.” He’s also calling for a rebound in the U.S. economy, due in part to the nearly 100% jump in oil prices since the February lows and a weaker dollar. More important, he expects U.S. corporate earnings to grow and market valuations to expand.

Add it all up and you have the recipe for a stock market rally